Loveland's Schmidt's Bakery files Chapter 7 bankruptcy

Leaves unpaid employees in the lurch

Lost in the heart of a 45-page bankruptcy filed by owners of Schmidt's Bakery and Delicatessen are eight pages containing the names of 40 employees.

The $24,000 owed them for work performed prior to an early January lockup by state tax agents is now in the hands of a U.S. Bankruptcy Court process, and those workers will stand in line along with other creditors hoping to recoup their losses.

The Chapter 7 bankruptcy filing lists just over $44,000 in assets, against more than $814,000 in liabilities that include tax deficiencies for state sales and wage withholding taxes, and $190,000 in federal payroll tax withholdings that the Internal Revenue Service said it never received.

The bakery and delicatessen, as emblematic in Loveland as a valentine for a large and loyal customer base, was seized by Colorado tax agents on the morning of Jan. 8.

The lockup was so sudden that several breakfast customers were asked to leave without finishing, or paying for, their meals.

None of the principal owners of The Bakery Inc., the corporate entity that holds Schmidt's, responded to calls about the bankruptcy filing's contents.

But one, who managed the restaurant's financial affairs and whose name appears on paychecks, issued a written statement about the business failure late Monday.

Setting It Straight

The statement by Chris Reppert, secretary-treasurer of The Bakery Inc., suggests he alone knew the extent of the business's financial shakiness and looming tax troubles.

Reppert, a 34 percent shareholder of the company, said his co-owners Tracy and Deb Hilker were unaware of the circumstances that led to the abrupt shutdown.

"The record that I am compelled to set straight is the fact that the Hilkers (shareholders, officers, directors), investors, employees, etc., either didn't know the severity of our financial situation and tax problems or were completely unaware altogether," Reppert wrote.

"It was my duty as an officer of the corporation and my job to oversee the financial of the business, i.e., signing the checks, paying the taxes, etc."

Pushing A Boulder

Reppert's statement describes how he was left with "a very big boulder to push up a very big mountain" as financial manager of the bakery.

The court filing lists 102 creditors, including the 40 employees.

Creditors meeting set

Employees of Schmidt's Bakery and Delicatessen, and other creditors listed in the company's bankruptcy filing, are invited to attend a creditors meeting at 10 a.m. March 5 at the Larimer County Courthouse, Room 233, 220 W. Oak St. in Fort Collins.

Schmidt's is represented by Fort Collins lawyer Greg Bell. Questions about the case can be directed to him by phone at 493-8999, or by email at lfirnett@bell-law.com.

The largest claims will come from the IRS, the Colorado Department of Revenue, inventory suppliers and individual investors holding promissory notes and contracts, including founders Harry and Charlotte Schmidt.

The bankruptcy filing negates a public sale of Schmidt's equipment and other assets, ordered by the Colorado Department of Revenue and scheduled for Feb. 27.

Several employees have reported that some of their personal belongings remain locked away in the closed restaurant, and will have to await information from the court on how to retrieve it.

In an email message accompanying his statement, Reppert said he regretted the plight of the business's former employees.

"We care about the employees that we have and the ones that we had," he wrote.

"We always did and will still always. Yes this is not fair by any means to any employees. And living paycheck to paycheck ... I am in the same boat. Believe us when we say we feel awful for our employees."